Just to be clear this is not financial advice, and there are more factors than an earnings beat that affect stock price, but this is why I think NVDA will beat revenue predictions of $28B on Aug 28th 2024.
As reported by The Observer it lists MSFT and META as the 2 biggest customers of NVDA chips last year (they spent $9B in 2023). Their total capex for 2023 is $55.3B combined. Which means that they spent 16.2% of their total Capex spending in 2023 on NVDA chips alone. So I looked at their Capex for this last quarter, which is $22.04B combined, up from $15.17B combined in Q2 2023 (up 45% YoY). The article also states that these 2 along with AMZN, and GOOGL make up a little less than 40% of all NVDA chip sales in 2023. So, I looked at their numbers as well. AMZN and GOOGL in Q2-2024 spent $30.80B on Capex, up from $18.33B in Q2 2023 (up 68% YoY). If we use the 16.2% of their capex rule on NVDA from 2023 then combined the 4 companies spent $8.56B in Q2 alone this quarter on NVDA chips.
But I think with such a huge increase YoY on Capex spending that the total % spent of capex on NVDA chips is closer to 30% at least. Which would mean they spent $15.82B on NVDA chips last quarter. Looking at NVDA’s Q1 earnings they reported $22.5B in datacenter chip sales Q1. Meaning potentially 40% of their customer base has already purchased 75% of their total revenue in chip sales from Q1 2024 in Q2 2024. NVDA in their first quarter presentation is expecting $28.0B in total revenue for Q2 2024, which is 7.52% higher than what they reported in Q1 ($26.04B). Yet their biggest customers are reporting an avg increase in Capex spending of 19.33% from Q1 to Q2 in 2024.
I think this is a no brainer beat of the predicted $28B in revenue. Yet impacts to profit margins, chip shortages, and guidance changes of 2025 that are unknown mean the price action can’t be accurately predicted. Invest at your own risk. I would love to hear others opinions on this upcoming earnings for NVDA and what they think could be reported.